Forensic Linguistics: Financial Rhetoric and the Intent to Deceive

I advertise myself (accurately) as a "linguistics expert," so I sometimes get questions about language usage.

One recent correspondent was wondering whether - given all the usage "errors" people commit these days - the language wasn't somehow losing its nuance, being reduced to the lowest common denominator..."dumbed down." Maybe, the reasoning goes, if we lose these important distinctions, we won't be able to communicate at all.

To those people I say: chill out. (Unless you're someone who likes to play gotcha games with other people's speech "errors," in which case I say: shut up.) Language is a complex system which won't be severely impaired by a little variation and change.

To allay fears of language change (and presumed deterioration), I refer to the linguistic newcomers as "transitional" forms. Transition to what? We don't know. It may be prominence (new form replaces old) or oblivion.

The form that already exists, then, is the "traditional." This terminology is an alternative to emotional reactions to language variation.

The only real dumbing down I can think is the stripped-down languages called pidgins, often created quickly to allow communication between people who were employing or trading with each other.

Their children grow up speaking a creole (my doctoral thesis on this subject is at http://openlibrary.org/books/OL2161807M/Grammatical_structure_and_style-shift_in_Hawaiian_Pigdin_and_Creole), a different - but still recognizable and understandable - variant of the previous dominant language: French creole in Haiti, English in Jamaica.

A much more urgent concern, because of its dire economic complications, is the spread of deliberately complex, opaque language.

Yes, paradoxically, even though English has simplified over the years (even sentence fragments are appearing in print), the complexity of (grammatically and mechanically perfect) legal and financial jargon, idiom, and phraseology create a dialect that's unintelligible to most native speakers, even educated, literate ones.

Such writing may be a vehicle of vagueness and evasion; dishonest people can use the complexity to get away with duplicity, as readers reach the MEGO ("my eyes glaze over") point.

Bureaucratese and legalese (chief characteristics: specialized jargon, impersonal phraseology, extended sentences, useless repetition) continue to thrive and prosper, just because they are so useful.

Linguistic obscurity is a growth stock, especially today, when the very abstractness of electronic wealth allows infinite machinations and manipulations. The language that describes all of this can become so complex that the true workings of financial activities and investment instruments will elude people who lack the patience to read - and sophistication to understand - all the fine print (i.e., 99.9% of us).

Recently, legalese/bureaucratese has been exploited, by devious corporations, accountants and lawyers, to supply a house-of-cards foundation to the financial machinations that caused the nation's economy to implode.

In "The Analogy of Avarice: Why the finance industry never had to lie" (a review of James Stewart's new book Tangled Webs: How False Statements Are Undermining America, Harper's, Feb. 2012), Jennifer Szalai says that the industry, unlike Bernie Madoff, never had to lie: it was so good at creating complex financial instruments and hiding its duplicities under a fog of words.

"Banks structured derivatives and other securities to enable their clients to take on a massive amount of risk that was nevertheless legal; accountants and law firms ensured that those risks would remain hidden from investors, who could be counted on to trust the triple-A rating or to avoid the eye-glazing chore of reading the fine print.

"'False statements' were...mostly superfluous because of a peculiar system...that left much of the actual regulation to the market participants. [There were] rules about 'disclosure,' [but those]... disclosures in a financial report could be buried in the footnotes and, with some clever wording, made sufficiently dull to ensure that they would barely be seen as red flags."

From page 30, note 3 of Enron's 2000 annual report, just one year before the firm imploded:

"'Securitization. From time to time, Enron sells interests in certain of its financial assets. Some of the sales are completed in securitization, in which Enron concurrently enters into swaps associated with the underlying assets which limit the risks assumed by the purchaser. Such swaps are adjusted to fair value using quoted market prices, if available, or estimated fair value based on management's best estimate of the present value of future cash flow. The swaps are included in Price Risk Management activities above as equity investments.'

What does that even mean? Not much, according to Szalai:

"The text was undoubtedly fussed over by a platoon of lawyers in order to achieve just the right balance of disclosure and evasion [all emphasis mine]. The company might have sold some assets, or it might not have sold some assets; those sales, if any, might include securitizations, or they might not have included securitizations; the securitizations might have had a market price, or they might not have had a market price; if they didn't, then Enron's management gave them a price according to 'management's best estimate' - which is to say, whatever management believed they were worth....

"All this would merit the word 'monstrous,' except the adjective implies an element of excitement and drama, whereas this is a system that thrives on obstruction and boredom. According to [its] conventions...the footnotes are more important than the main body of the text. Sentences are crafted so as not to be read. Language should confound rather than communicate."

But all too often, it does confound. And that obscurity -- in an account of what companies are doing with the wealth of the people reading the account - is intentional. We don't have the time or inclination to wade through it all, and it's doubtful that clarity would emerge even if we did.

The principles of clear communication don't change. Disregarding them in order to confuse and deceive is unconscionable. Deliberate obscurity does irreparable damage to the thin bonds of trust that are supposedly encoded in words on a page. It buries, in a steaming pile of verbosity and BS, the premise that the writer is actually trying to tell the reader something.

Dr. Alan Perlman, is a forensic expert who offers clients exceptional quality, experience, and expertise. He is an academically trained linguist, one of a small number of linguistics experts who assist the legal professions.